Exports are increasingly important to the United States' economy and American companies for a variety of reasons. For example, Martin Feldstein, Harvard Professor and a member of the Wall Street Journal's board of contributors, says during the last year, the rise in U.S. exports contributed more than 50 percent of gross domestic product (GDP) growth. This is especially impactful as the United States struggles to achieve higher levels of growth and lower unemployment, and since American consumer spending, which traditionally has been the engine of growth during past recoveries, is not performing well.

Exports also enable American producers of goods and services to move beyond the U.S. market of 312 million and sell to the world market, which is expected to top 7 billion in April next year. This is becoming an issue of greater consequence as emerging and developing economies are projected to grow more than three times faster than the United States next year, the International Monetary Fund reports.

Plus, the American share of world consumption, at approximately 27 percent in 2010, is expected to decline to 21 percent by 2020. During the same period, China's world consumption, estimated at about 9 percent, is expected to climb to 21 percent, according to Credit Suisse, a financial services company.

Reaching beyond our borders also is very rewarding for U.S. workers. For instance, in 2008 exports supported 10.3 million American jobs—that's 7.5 million jobs attributed to goods exports and another 2.8 million to service exports, according to the U.S. Department of Commerce. Plus, U.S. jobs sustained by exports pay 13 percent to 18 percent more than the U.S. national average wage, the U.S. Trade Representative calculates. But that’s not all.

American exporting firms, on average, employ almost twice as many workers, produce twice as much output, provide health insurance and pensions, and have higher productivity levels than nonexporting firms, says Howard Rosen of the Peterson Institute for International Economics, a Washington, D.C. think tank. Exports also help alleviate the national debt burden.

Efforts To Boost Exports Are Underway

Understanding of the enormous benefits of exporting, last year President Obama announced the National Export Initiative and the ambitious goal of doubling exports in five years. This is to be achieved by removing foreign trade barriers, assisting in financing, helping firms overcome hurdles to entering foreign markets, pursuing an export advocacy effort abroad, and other steps.

Despite the tremendous advantages offered by exporting, it’s surprising just how many companies don't engage internationally. In fact, Rosen indicates that only four percent of U.S. companies export, and more than half only trade with one country. Our competitors, on the other hand, rely on foreign sales to a much greater degree. U.S. exports of goods and services generated nearly one-eighth of American GDP in 2010. However, in recent years, exports of goods and services represented 40 percent of European and Chinese GDP, 36 percent of Canadian GDP, 22 percent of Indian GDP, and 16 percent of Japanese GDP, Rosen says.

What's worse, "The United States actually exports only half as much of its manufacturing production as the average for other major manufacturing nations," reports Frank Vargo, Vice President of International Economic Affairs at the National Association of Manufacturers in Washington, D.C. This is of much concern since manufactured exports support more than 1 in 6 manufacturing jobs.

To improve exports, Vargo suggests Congress submit the pending bilateral trade agreements with Colombia, Korea and Panama to Congress for a vote. If implemented, the U.S. Trade Representative says the agreements would boost U.S. GDP by $25 billion.

What We Sell

Even in the absence of new trade agreements, the United States leads the world in exports of merchandise and services. In 2010, the largest foreign buyers of American goods were Canada, with $249 billion; followed by Mexico, $163 billion; China, $92 billion; Japan, $61 billion; the United Kingdom, $49 billion; Germany, $48 billion; South Korea, $39 billion; Brazil, $35 billion; the Netherlands, $35 billion; and Singapore, $29 billion, according to the U.S. Department of Commerce.

Last year, the United States’ largest merchandise export categories included transportation equipment; computer and electronic products; chemicals; machinery, except electrical; petroleum and coal products; miscellaneous manufactured commodities; agricultural products; primary metal manufactures; food manufactures; and electrical equipment.

Get the Information You Need

In order to significantly increase American exports, many more small and medium-size companies need to get into the game. For assistance, contact the U.S. Commercial Service, the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration, which maintains a network of professionals in over 100 U.S. cities and in more than 75 countries. For details, visit www.Export.gov.

This article appeared in International Insights, a publication of Fifth Third Bank, September 2011.

John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the Manzella Report, is a world-recognized speaker, author of several books, and an international columnist on global business, trade policy, labor, and the latest economic trends. His valuable insight, analysis and strategic direction have been vital to many of the world's largest corporations, associations and universities preparing for the business, economic and political challenges ahead.

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